Change in the price of this bond if yield to maturity rises

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1. A 5 year, 4.25% coupon bond has a par value of $1,000. What is the change in the price of this bond if the yield to maturity rises to 4.75% from the current yield of 3.75%?

a) $22.31 increase

b) $44.21 increase

c) $44.21 decrease

d) $44.63 decrease

2. The par value of a bond is less than its current price. Which one of the following applies to this bond?

a) Yield to maturity is less than the coupon rate.

b) Currently selling at par.

c) Yield to maturity is greater than the coupon rate.

d) Yield to maturity is equal to the coupon rate.

Reference no: EM131548968

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